My question relates to legal practice in the state of: Virginia

I had to fire a contractor due to substandard performance before the completion of the project. The contractor is sueing me for not paying him in full.

During the meeting right after the first court appearance, the opposite party lawyer threatened to report me to IRS for giving a partial payment to his client in cash.

1. Should I report the opposite party lawyer to a Board?

2. Could I be in a trouble for paying partially in cash? What should I do now to fix it?